Home-Price Scorecard: A Turning Market, But Which Way?

Our latest price scorecard raises the question of whether a real or false spring is under way.

The March numbers, which show the percentage change in prices compared with March 2011, offer a rare “thumbs up” from an index: one from the Federal Housing Finance Agency following home purchases involving loans backed by Fannie Mae or Freddie Mac. An earlier Developments post explored how foreclosures might play less of a role in this index, but its upbeat result isn’t as much of an outlier as it might seem here.

Other indexes reported less-severe price drops, and the monthly changes from February to March looked better still. Zillow’s index, which measures home values and not just individual sales prices, reported a rise of 0.5% from February to March, the biggest on a monthly basis since May 2006, and another uptick from March to April. It’s worth remembering that these indexes often capture earlier activity, so prices could be stronger today than they seem.

Still, it’s hard to envision a recovery for the housing market while the jobs market is still ailing, and some say the housing market itself remains too troubled to bottom out. “In light of the oversupply we continue to see in the market, we disagree with the widespread view that home prices have reached a bottom or will do so in the near future,” Michael Feder, chief executive of data-provider Radar Logic, said when the firm released its market report last week. A change of mood in response to gloomy economic news could undermine housing demand, he said.

Radar Logic says the main concern is the “supply overhang” of homes “on the market, on their way to market or poised to enter the market the moment prices start to increase.” Housing prices won’t see a sustained recovery, the firm says, until the inventories of distressed homes are worked through the market. Absorbing this overhang, could take years at the current rate of sales.

The mild winter might have sent buyers out earlier in the season this year, shifting activity up from the usual selling season—and meaning the year-over-year comparisons that overstate the health of the housing market.

In the short-term, brokers and buyers are often talking about just the opposite problem: that there are too few quality listings, and the competition for the available homes is heating up.

Dania Perry, an agent with Century 21 Jim White & Associates, of Treasure Island, Fla., said buyers are increasingly nervous about not getting the home they want. This is bolstering prices for sellers, she said. “I’m not seeing that continual decline,” she said of prices. “What I’m seeing is it stabilizing.”

But the falling prices reported in many indexes continue to give potential buyers and sellers pause. Rick Greenblatt, 43, who is planning to list his two-bedroom, two-bath condo in Huntington Beach, Calif., said he watches the indexes on a regular basis. “The numbers aren’t very encouraging,” he said.

Mr. Greenblatt is also considering buying a home after selling, but he said the persistent price drops may deter him. “I need to make sure that before I pull the trigger on something, I’m not paying too much.”

Write to Matthew Strozier at matthew.strozier@wsj.com

Source note: S&P/Case-Shiller’s 20-city composite. The LPS index tracks sales down to the ZIP-Code level. Federal Housing Finance Agency’s purchase-only index uses prices of houses with mortgages backed by Fannie or Freddie. The FNC index has data from 100 major metro areas, and excludes foreclosures. CoreLogic’s index used here includes distressed sales. Radar Logic tracks values for 25 metro areas. The Clear Capital index is derived from nationwide closed transactions. The Zillow Home Value Index is the median Zestimate valuation for an area, excluding foreclosures but including short sales. For comparison’s sake, the scorecard has data from the same month from each source. Certain providers have reported more recent data, available on their websites.